NEW MOFUSSIL COMPANY LIMITED Vs. RUSTOMJI DHANJISHA MEWAWALA

JUDGEMENT

(1.) [His Lordship after narrating the facts went on :] At an early stage of the hearing, Mr, Munshi, on behalf of the defendant, gave up the issue as to jurisdiction. In the course of the further hearing he gave up his contention as regards the New Mahaloo Ginning Factory not being a party to the new pool, and finally he stated that he did not dispute the figures as to the amount claimed.

(2.) Before dealing with the issues it is necessary to know what the agreement between the parties is, its nature, and the constitution of the pool. This can be found from the correspondence between the parties and from the agreement in question. It is common ground that there was a pooling agreement for the cotton season of 1929-30 and it formally came to an end in September, 1930, though virtually in about July, 1930. It is also common ground that cotton season begins from October 17 or 19 and lasts up to the following July. The pooling agreement is spoken of in the correspondence sometimes as a combination, sometimes as a joint, and sometimes as a joint association.

(3.) On July 11, 1930, the defendant wrote to the trustees of the Dhulia Ginning Joint Association to the effect that he had come to know that the combination was going to be terminated on account of the default in payment of himself and Chaturbhuj Sojpal. He stated that he was willing to have an award made and a decree passed in terms of the award in respect of the amounts due by himself and Chaturbhuj. He suggested that separate bills for the moneys due at such rate as the trustees or the parties may fix should be made out by him and Chaturbhuj, and the amount thereof be paid by him and Chaturbhuj within four days to the trustees of the new combination, and he therefore requested that the new factory owners may be admitted, and either the old joint which had not been formally dissolved should be continued or a new pool should be formed. On July 15, the plaintiffs issued a circular to the members of the factory owners at Dhulia, who were also members of the old pool, and the circular stated that a meeting had been held on March 25, 1930, of the gin owners and it was resolved that steps should be taken against the parties in default, and intimated that suits against them were about to be filed. The formal consent of the gin owners was requested by the circular. This circular was also sent amongst others to the defendant. On July 27, the defendant reminded the plaintiffs of his letter of July 11. This, I have no doubt, he did after coming to know that suits were about to be filed against him and the other defaulters. In the meanwhile the old pool was terminated, which appears from exhibit F, and also appears from circular No. 14, exhibit E., dated August 14, 1930, issued by the plaintiffs. This circular amongst others is signed by the defendant. In this it was stated that some parties had approached the plaintiffs with a request to form a new combination and to make some arrangement by which moneys due from the defaulters could be recovered. The circular mentioned the amounts due from the defaulters. It further stated that the defendant and Chaturbhuj Sojpal had seen the plaintiffs and were very anxious for a new combination, and had agreed to certain terms, according to which the plaintiffs thought they would be able to recover the arrears due by them. The plaintiffs therefore proposed that a meeting of the parties should be held on August 19, 1930, Accordingly, a meeting was held on that day and certain terms for forming a new pool were agreed to by all the parties including the defendant. This appears from circular No. 18, exhibit G, which is a very important document and on which the plaintiffs claim is partly based. The circular makes it clear that the terms which are set out therein were accepted by all the parties, including the defendant. It further shows that it was resolved to form a new combination or a new pool of the Dhulia ginning factories. Clause 2 states the rate agreed upon. Ginning rate was to be Rs. 8-4-6 per Boja (which is a measure of about 392 Ibs.), the amount for expenses to be retained by the working parties was to be Rs. 5-8-6 per Boja, and Rs. 2-12-0 per Boja were to be paid by each party into the pool. Clause 3 sets out the shares of the parties according to which distributions were to be made. It is common ground that these shares are generally fixed and were fixed in accordance with the number of gins in each factory. Clause 4 lays down the method of calculating and recovering the ginning charges from the members. Under this each party had to prepare daily bills for ginning charges for all cotton ginned and hand over the bills to the custodians, and no cotton was to be allowed to be removed from the factory or the compound till the full bill was paid by the constituent or the factory to the custodians; and on this being done, the latter were to issue a certificate in writing allowing the cotton to be removed. The pool accounts were to be made every week on Monday in respect of the work done in the previous week, and the amount in the hands of the custodians after deduction of certain expenses was to be distributed in accordance with the shares fixed amongst the members, except in the case of certain parties. The terms further authorised the custodians to call upon any party guilty of default to close his factory for the season, and on failure to do so the custodians had the power of taking the necessary legal steps for that purpose. Under Clause 5 the plaintiffs were to be the custodians. Clause 6 stated who the defaulters were and the amounts which were due by them, and included the defendant, and the amount shown against him was Rs. 15,816-10-0. Clause 6 has further sub-clauses, under one of which the door was left open for the New Jamshed Factory, the owners of which had become insolvents, to come into the pool. Under another it was agreed that steps were to be taken against the New Mahaloo Ginning Factory who had not joined this pool. As to the defendant and Chaturbhuj, sub-cl, (c) of this clause runs as follows : As regands Messrs. Rustomji Dhanjishaw (defendant) and Chaturbhuj Sojpal, the owners of these two factories have agreed to retain with the custodians the full amount of their pool shares and not to receive anything from the pool till their arrears including costs that have been incurred in litigation against them are wiped off and the full amount due by them for the previous seasons including the said costs has been recovered from their shares in the pool thus retained. Both these parties will have to get the consent of the mortgagees of their respective factories to this arrangement. Clause 7 fixed the period for the continuance of the pool at three years commencing from October 1, 1930, unless notice to terminate it was given in the manner laid down in that clause. Clause 8 is important, and shows that in addition to these terms all the other terms contained in the usual pool agreements were agreed upon and were to be incorporated in the agreement to be drawn up forming the new pool. The usual terms, it is common ground, are those contained in exhibit A, which was the agreement in regard to the old pool.